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CST: 22/09/2019 02:58:20   

Level One Bancorp, Inc. reports fourth quarter 2018 net income of $4.0 million, representing $0.50 of earnings per diluted share

234 Days ago

Loan growth of 8.85% in the last twelve months and the size of the mortgage team doubled

FARMINGTON HILLS, Mich., Jan. 30, 2019 (GLOBE NEWSWIRE) -- Level One Bancorp, Inc. (“Level One”) (Nasdaq: LEVL) today reported financial results for the fourth quarter of 2018, which included net income of $4.0 million, or $0.50 per diluted share. This compares to net income of $3.3 million, or $0.41 per diluted share, in the preceding quarter and $933 thousand, or $0.14 per diluted share, in the fourth quarter of 2017.  For the twelve months ended December 31, 2018, Level One's net income was $14.4 million, or $1.91 per diluted share.  This compares to net income of $9.8 million, or $1.49 per diluted share, for the twelve months ended December 31, 2017.

Patrick J. Fehring, President and Chief Executive Officer, commented “We are pleased to announce a strong year with fourth quarter diluted earnings per share of $0.50 and full year diluted earnings per share of $1.91. Our fourth quarter net income of $4.0 million represented a 21.4% increase in earnings quarter over quarter, and our full year net income of $14.4 million represented a 46.2% increase in earnings year over year. Fourth quarter earnings were aided by a decline of 0.7% in non-interest expenses from the previous quarter. The solid 2018 earnings were driven by strong loan growth of approximately 9% and a continuing increase in noninterest income resulting from our previously announced expansion of our residential mortgage loan operations.  Earlier this month, we also announced the approval by our board of directors of a share buyback program as a further avenue for enhancing shareholder value while also maintaining strong capital levels.”

He continued, “2018 was an exciting year, marked with the completion of our initial public offering. Looking ahead to 2019 with a strong local economy and a solid loan pipeline, we are seeing good opportunities for quality growth in our markets, thereby enhancing shareholder value.”

Fourth Quarter 2018 Financial Highlights

  • Net income of $4.0 million, or $0.50 per diluted share, for the fourth quarter of 2018
  • Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.73%, compared to 3.97% in the preceding quarter and 4.00% in the fourth quarter of 2017
  • Annualized return on average assets was 1.11%, compared to 0.29% in the fourth quarter of 2017
  • Annualized return on average equity was 10.69%, compared to 3.40% in the fourth quarter of 2017
  • Total assets increased 8.83% to $1.42 billion at December 31, 2018, compared to $1.30 billion at December 31, 2017
  • Total loans increased 8.85% to $1.13 billion at December 31, 2018, compared to $1.03 billion at December 31, 2017
  • Total deposits increased 1.27% to $1.13 billion at December 31, 2018, compared to $1.12 billion at December 31, 2017
  • Book value per share increased 16.69% to $19.58 per share compared to $16.78 per share at December 31, 2017
  • Tangible book value per share increased 20.38% to $18.31 per share compared to $15.21 per share at December 31, 2017

Full Year 2018 Financial Highlights

  • Net income of $14.4 million, or $1.91 per diluted share, for the twelve months ended December 31, 2018
  • Net interest margin, on a FTE basis, was 3.92%, compared to 4.18% in 2017
  • Annualized return on average assets was 1.07%, compared to 0.82% in 2017
  • Annualized return on average equity was 10.68%, compared to 9.45% in 2017

Balance Sheet Review

Level One's total assets were $1.42 billion at December 31, 2018, a decrease of $30.1 million, or 2.08%, from $1.45 billion at September 30, 2018, and up $114.9 million, or 8.83%, from $1.30 billion at December 31, 2017. The decrease in total assets from third quarter of 2018 was primarily due to a decrease in cash balances held with the Federal Reserve Bank.

The investment securities portfolio was $204.3 million at December 31, 2018, an increase of $5.2 million, or 2.62%, from $199.1 million at September 30, 2018, and up $53.3 million, or 35.30%, from $151.0 million at December 31, 2017.

Total loans were $1.13 billion at December 31, 2018, an increase of $11.6 million, or 1.04 %, from $1.11 billion at September 30, 2018, and up $91.6 million, or 8.85%, from $1.03 billion at December 31, 2017. The growth in total loans compared to December 31, 2017 was primarily due to growth in our commercial real estate and residential real estate loan portfolios.

Total deposits were $1.13 billion at December 31, 2018, an increase of $4.3 million, or 0.38%, from $1.13 billion at September 30, 2018, and up $14.3 million, or 1.27%, from $1.12 billion at December 31, 2017. Total deposit composition at December 31, 2018 consisted of 31.92% of demand deposit accounts, 25.35% of savings and money market accounts and 42.73% of time deposits.

Operating Results

Level One's net interest income decreased $256 thousand, or 1.96%, to $12.8 million in the fourth quarter of 2018, compared to $13.1 million in the preceding quarter, primarily as a result of higher costs of funds, and increased $812 thousand, or 6.77%, compared to $12.0 million in the fourth quarter of 2017, primarily as a result of increased income on originated loans, partially offset by increased expense on deposits.

Level One’s net interest margin, on a FTE basis, was 3.73% in the fourth quarter of 2018, compared to 3.97% in the preceding quarter and 4.00% in the fourth quarter of 2017, primarily as a result of higher cost of funds, as well as a decline in average loan yield from the third quarter to the fourth quarter of 2018.

Level One's noninterest income increased $383 thousand, or 19.91%, to $2.3 million in the fourth quarter of 2018, compared to $1.9 million in the preceding quarter, and increased $910 thousand, or 65.14%, compared to $1.4 million in the fourth quarter of 2017. The change in noninterest income compared to the preceding quarter was primarily due to an increase in mortgage banking activities as a result of the expansion of the mortgage team as well as an increase in interest rate swap fee income, included in other charges and fees.

Level One’s noninterest expenses decreased $70 thousand, or 0.67%, to $10.4 million in the fourth quarter of 2018, compared to $10.5 million in the preceding quarter, and increased $1.2 million, or 12.97%, compared to $9.2 million in the fourth quarter of 2017. The increase in noninterest expenses year over year was predominantly a result of increased salary and employee benefits due to the doubling in size of the mortgage division during the third quarter of 2018. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the fourth quarter of 2018 was 68.68%, compared to 69.73% for the preceding quarter and 68.61% in the fourth quarter of 2017.

Level One's income tax provision was $836 thousand, or 17.46% of pretax income, in the fourth quarter of 2018, as compared to $665 thousand, or 16.96% of pretax income, in the preceding quarter and $2.3 million, or 71.29% of pretax income, in the fourth quarter of 2017. The decrease in tax expense during the fourth quarter of 2018, as compared to the fourth quarter of 2017, is primarily due to the change in federal corporate income tax rates from 35% to 21% and the recording of a $1.3 million deferred tax asset impairment in the fourth quarter of 2017 as a result of the enactment of the Tax Cuts and Jobs Act in December 2017.

Asset Quality

Nonperforming loans were $18.4 million, or 1.64% of total loans, at December 31, 2018, an increase of $5.5 million from nonperforming loans of $12.9 million, or 1.15% of total loans, at September 30, 2018, and an increase of $4.4 million from nonperforming loans of $14.0 million, or 1.36% of total loans, at December 31, 2017. The increase in nonperforming loans is primarily due to a large loan relationship of $7.2 million moving to nonaccrual, partially offset by the payoff of $2.9 million on a nonaccrual loan relationship during the fourth quarter 2018.  Level One had no other real estate owned assets at December 31, 2018 or September 30, 2018, compared to $652 thousand at December 31, 2017. Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 1.30% at December 31, 2018, compared to 0.89% at September 30, 2018, and 1.13% at December 31, 2017.

In addition, we had $243 thousand in loans 90 days or more past due and still accruing at December 31, 2018, compared to $354 thousand at September 30, 2018 and $440 thousand at December 31, 2017.

Performing troubled debt restructured loans that were not included in nonaccrual loans at December 31, 2018 were $931 thousand, compared to $2.5 million in the preceding quarter and $1.2 million at December 31, 2017. Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, forbearance agreements, and principal deferral or reduction, are categorized as troubled debt restructured loans.

Net chargeoffs in the fourth quarter of 2018 were $274 thousand, or 0.10% of average loans on an annualized basis, compared to $194 thousand of net chargeoffs, or 0.07% of average loans on an annualized basis, for the preceding quarter and $873 thousand of net chargeoffs, or 0.35% of average loans on an annualized basis, for the quarter ended December 31, 2017.

Level One's fourth quarter provision for loan losses was a provision benefit of $51 thousand, compared to a provision expense of $619 thousand in the preceding quarter and a provision expense of $956 thousand in the fourth quarter of 2017.  The change in provision for loan losses was primarily due to lower charge offs than the specific reserve on a loan that paid off during the fourth quarter of 2018. The allowance for loan losses was $11.6 million, or 1.03% of total loans, at December 31, 2018, compared to $11.9 million, or 1.07% of total loans, at September 30, 2018, and $11.7 million, or 1.13% of total loans, at December 31, 2017. As of December 31, 2018, the allowance for loan losses as a percentage of nonperforming loans was 62.70%, compared to 92.36% at September 30, 2018, and 83.38% at December 31, 2017.

Capital

Total shareholders’ equity was $151.8 million at December 31, 2018, an increase of $6.3 million, or 4.33%, compared with $145.5 million at September 30, 2018, primarily as a result of increased retained earnings and decreased accumulated other comprehensive loss, and an increase of $43.8 million, or 40.57%, from $108.0 million at December 31, 2017, primarily as a result of our initial public offering of 1,150,765 shares of common stock in April of 2018.

Recent Developments

Fourth Quarter Dividend: On December 20, 2018, Level One’s Board of Directors declared a quarterly cash dividend of $0.03 per share. This dividend was paid out on January 15, 2019, to stockholders of record at the close of business on December 31, 2018.

Share Buyback Program: On January 23, 2019, Level One announced that its Board of Directors approved a repurchase program under which Level One is authorized to repurchase, from time to time as Level One deems appropriate, shares of Level One’s common stock with an aggregate purchase price of up to $5 million.  The repurchase program began on January 23, 2019, and expires on December 31, 2020.  The repurchase program does not obligate Level One to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended or discontinued at any time.

About Level One Bancorp, Inc.

Level One Bancorp, Inc. is the holding company for Level One Bank, a full-service commercial and consumer bank headquartered in Michigan with assets of approximately $1.42 billion as of December 31, 2018. It operates eleven banking centers throughout southeast Michigan and west Michigan. Level One Bank's success has been recognized both locally and nationally as the U.S. Small Business Administration's (SBA) "Community Lender of the Year" and "Export Finance Lender of the Year" and one of S&P Global's Top 10 "Best-Performing Community Banks" in the nation. Level One's commercial division provides a menu of products including lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, and a full suite of treasury management and private banking services. The consumer division offers personal savings and checking accounts and a complete array of consumer loan products including residential mortgages, home equity, auto, and credit card services. Level One Bank offers a variety of online banking services and a robust mobile banking application for individuals and businesses.  Level One Bank offers the sophistication of a big bank, the heart of a community bank, and the spirit of an entrepreneur. For more information, visit www.levelonebank.com.  

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current views of future events and operations. These forward-looking statements are based on the information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risk and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations, changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, as well as other risks described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Summary Consolidated Financial Information    
(Unaudited) As of or for the three months ended,
(Dollars in thousands, except per share data) December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Earnings Summary                  
Interest income $ 17,041     $ 16,629     $ 15,380     $ 14,774     $ 14,374  
Interest expense 4,228     3,560     2,965     2,647     2,373  
Net interest income 12,813     13,069     12,415     12,127     12,001  
Provision (benefit) for loan losses (51 )   619     (710 )   554     956  
Noninterest income 2,307     1,924     1,452     1,372     1,397  
Noninterest expense 10,384     10,454     9,705     9,135     9,192  
Income before income taxes 4,787     3,920     4,872     3,810     3,250  
Income tax provision 836     665     860     642     2,317  
Net income $ 3,951     $ 3,255     $ 4,012     $ 3,168     $ 933  
Per Share Data                  
Basic earnings per common share $ 0.51     $ 0.42     $ 0.54     $ 0.48     $ 0.15  
Diluted earnings per common share 0.50     0.41     0.53     0.47     0.14  
Book value per common share 19.58     18.77     18.51     16.78     16.78  
Tangible book value per share (1) 18.31     17.50     17.23     15.27     15.21  
Shares outstanding (in thousands) 7,750     7,749     7,749     6,585     6,435  
Average basic common shares (in thousands) 7,750     7,749     7,456     6,539     6,403  
Average diluted common shares (in thousands) 7,893     7,901     7,613     6,699     6,630  
Selected Period End Balances                  
Total assets $ 1,416,215     $ 1,446,269     $ 1,322,913     $ 1,300,629     $ 1,301,291  
Securities available-for-sale 204,258     199,051     196,047     160,349     150,969  
Total loans 1,126,565     1,114,999     1,045,789     1,051,354     1,034,923  
Total deposits 1,134,635     1,130,311     1,065,216     1,112,644     1,120,382  
Total liabilities 1,264,455     1,300,810     1,179,468     1,190,106     1,193,331  
Total shareholders' equity 151,760     145,459     143,445     110,523     107,960  
Tangible shareholders' equity (1) 141,926     135,570     133,501     100,524     97,906  
Performance and Capital Ratios                  
Return on average assets (annualized) 1.11 %   0.95 %   1.23 %   1.00 %   0.29 %
Return on average equity (annualized) 10.69     8.95     11.97     11.64     3.40  
Net interest margin (fully taxable equivalent) (2) 3.73     3.97     3.99     4.03     4.00  
Efficiency ratio (noninterest expense/net interest
income plus noninterest income)
68.68     69.73     69.99     67.67     68.61  
Total shareholders' equity to total assets 10.72     10.06     10.84     8.50     8.30  
Tangible equity to tangible assets (1) 10.09     9.44     10.17     7.79     7.58  
Common equity tier 1 to risk-weighted assets 11.82     11.75     12.11     9.47     9.10  
Tier 1 capital to risk-weighted assets 11.82     11.75     12.11     9.47     9.10  
Total capital to risk-weighted assets 14.00     13.99     14.44     11.87     11.55  
Tier 1 capital to average assets (leverage ratio) 10.21     10.31     10.60     8.15     7.92  
Asset Quality Ratios:                  
Net charge-offs (recoveries) to average loans 0.10 %   0.07 %   (0.26 )%   0.29 %   0.35 %
Nonperforming assets as a percentage of total assets 1.30     0.89     0.85     1.00     1.13  
Nonperforming loans as a percent of total loans 1.64     1.15     1.08     1.23     1.36  
Allowance for loan losses as a percentage of
period-end  loans
1.03     1.07     1.10     1.09     1.13  
Allowance for loan losses as a percentage of
nonperforming loans
62.70     92.36     101.67     88.67     83.38  
Allowance for loan losses as a percentage of
nonperforming loans, excluding allowance
allocated to loans accounted for under ASC 310-30
57.71     84.72     92.93     80.36     75.68  


(1)   See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.
(2)   Presented on a tax equivalent basis using a 35% tax rate for the 2017 time period and 21% tax rate for 2018 time periods.


GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include tangible shareholders' equity, tangible book value per share, and the ratio of tangible shareholders' equity to tangible assets. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe financial analysts and others frequently use these measures, and other similar measures, to evaluate capital adequacy. We calculate: (i) tangible shareholders' equity as total shareholders' equity less core deposit intangibles and goodwill; (ii) tangible book value per share as tangible shareholders' equity divided by shares of common stock outstanding; and (iii) tangible assets as total assets, less core deposit intangibles and goodwill.

The following presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP:

Reconciliation of Non-GAAP Financial Measures        
(Unaudited) As of
(Dollars in thousands, except per share data) December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
                   
Total shareholders' equity $ 151,760     $ 145,459     $ 143,445     $ 110,523     $ 107,960  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 447     502     557     612     667  
Tangible shareholders' equity $ 141,926     $ 135,570     $ 133,501     $ 100,524     $ 97,906  
                   
Shares outstanding (in thousands) 7,750     7,749     7,749     6,585     6,435  
Tangible book value per share $ 18.31     $ 17.50     $ 17.23     $ 15.27     $ 15.21  
                   
Total assets $ 1,416,215     $ 1,446,269     $ 1,322,913     $ 1,300,629     $ 1,301,291  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 447     502     557     612     667  
Tangible assets $ 1,406,381     $ 1,436,380     $ 1,312,969     $ 1,290,630     $ 1,291,237  
                   
Tangible equity to tangible assets 10.09 %   9.44 %   10.17 %   7.79 %   7.58 %

 

Consolidated Balance Sheets          
(Unaudited) As of
  December 31,   September 30,   December 31,
(Dollars in thousands) 2018     2018     2017  
Assets          
Cash and cash equivalents $ 33,296     $ 77,837     $ 63,661  
Securities available-for-sale 204,258     199,051     150,969  
Federal Home Loan Bank stock 8,325     8,325     8,303  
Mortgage loans held for sale, at fair value 5,595     9,392     4,548  
Loans:          
Originated loans 1,041,898     1,022,119     920,895  
Acquired loans 84,667     92,880     114,028  
Total loans 1,126,565     1,114,999     1,034,923  
Less: Allowance for loan losses (11,566 )   (11,890 )   (11,713 )
Net loans 1,114,999     1,103,109     1,023,210  
Premises and equipment, net 13,242     13,506     13,435  
Goodwill 9,387     9,387     9,387  
Other intangible assets, net 447     502     667  
Bank-owned life insurance 11,866     11,785     11,542  
Income tax benefit 2,467     3,201     3,102  
Other assets 12,333     10,174     12,467  
Total assets $ 1,416,215     $ 1,446,269     $ 1,301,291  
Liabilities          
Deposits:          
Noninterest-bearing demand deposits $ 309,384     $ 380,369     $ 324,923  
Interest-bearing demand deposits 52,804     50,226     62,644  
Money market and savings deposits 287,575     238,351     289,363  
Time deposits 484,872     461,365     443,452  
Total deposits 1,134,635     1,130,311     1,120,382  
Borrowings 99,574     146,483     47,833  
Subordinated notes 14,891     14,882     14,844  
Other liabilities 15,355     9,134     10,272  
Total liabilities 1,264,455     1,300,810     1,193,331  
Shareholders' equity          
Common stock:          
Authorized - 20,000,000 shares          
Issued and outstanding - 7,750,216 shares at 12/31/18, 7,749,216 shares
at 9/30/2018, and 6,435,461 shares at 12/31/2017
90,621     90,411     59,511  
Retained earnings 62,891     59,173     49,232  
Accumulated other comprehensive loss, net of tax (1,752 )   (4,125 )   (783 )
Total shareholders' equity 151,760     145,459     107,960  
Total liabilities and shareholders' equity $ 1,416,215
    $ 1,446,269     $ 1,301,291  

 

Consolidated Statements of Income                  
(Unaudited)                  
  Three months ended   Year ended
  December 31,   September 30,   December 31,   December 31,   December 31,
(In thousands, except per share data) 2018   2018   2017   2018   2017
Interest income                  
Originated loans, including fees $ 13,412     $ 12,653     $ 10,547     $ 49,076     $ 39,812  
Acquired loans, including fees 2,013     2,454       2,790       9,186       12,231  
Securities:                  
Taxable 882     816       508     2,939       1,746  
Tax-exempt 476     450       314     1,657     955  
Federal funds sold and other 258     256       215     966     863  
Total interest income 17,041     16,629       14,374       63,824
      55,607  
Interest Expense
Deposits 3,588     2,802       1,935       11,055       6,267  
Borrowed funds 384     502   183     1,330     797
Subordinated notes 256     256     255     1,015     1,014  
Total interest expense 4,228     3,560       2,373       13,400       8,078  
Net interest income    12,813        13,069       12,001       50,424       47,529
Provision expense (benefit) for loan losses   (51 )      619        956        412        1,416
Net interest income after provision for loan
losses
12,864     12,450       11,045       50,012       46,113  
Noninterest income                 
Service charges on deposits 641     655       638     2,556     2,543  
Net gain (loss) on sale of securities (71 )       32     (71 )   208  
Mortgage banking activities 936     754       438     2,330     1,698  
Net gain on sale of commercial loans             11     146  
Other charges and fees 801     515       289     2,229     1,907  
Total noninterest income 2,307     1,924       1,397       7,055       6,502  
Noninterest expense
Salary and employee benefits 6,768     6,888           5,552     25,781     21,555  
Occupancy and equipment expense 1,132     1,173           1,078     4,425     4,208  
Professional service fees 441     494           631     1,672     2,314  
Marketing expense 336     264           162     1,033     930  
Printing and supplies expense 98     127           106     441     477  
Data processing expense 634     565           528     2,146     1,912  
Other expense 975     943           1,135     4,180     4,655  
Total noninterest expense 10,384     10,454           9,192     39,678     36,051  
Income before income taxes 4,787     3,920           3,250     17,389     16,564  
Income tax provision 836     665     2,317     3,003     6,723  
Net income $ 3,951     $ 3,255     $ 933     $ 14,386     $ 9,841  
Earnings per common share:                  
Basic $ 0.51     $ 0.42     $ 0.15     $ 1.95     $ 1.54  
Diluted $ 0.50     $ 0.41     $ 0.14     $ 1.91     $ 1.49  
Average common shares outstanding - basic 7,750     7,749       6,403       7,377       6,388  
Average common shares outstanding - diluted    7,893        7,901       6,630       7,524        6,610

 

 


Net Interest Income and Net Interest Margin
(Unaudited)
  For the three months ended,
  December 31, 2018
  September 30, 2018
  December 31, 2017
(Dollars in thousands) Average
Balance
Interest
(1)
Average Rate
(2)
  Average
Balance
Interest
(1)
Average
Rate (2)
  Average
Balance
Interest
(1)
Average Rate
(2)
Interest-earning assets:                      
Gross loans (3) $ 1,131,705   $ 15,425   5.41 %   $ 1,075,642   $ 15,107   5.57 %   $ 1,010,230   $ 13,337   5.24 %
Investment securities (4):                      
Taxable 133,817   882   2.61     134,619   817   2.41     98,045   508   2.06  
Tax-exempt 71,025   476   3.13     67,599   449   3.13     50,568   314   3.64  
Interest earning cash balances 27,107   164   2.39     28,685   157   2.17     36,953   125   1.34  
Federal Home Loan Bank Stock 8,325   94   4.48     8,303   99   4.73     8,303   90   4.30  
Total interest-earning assets $ 1,371,979   $ 17,041   4.95 %   $ 1,314,848   $ 16,629   5.04 %   $ 1,204,099   $ 14,374   4.79 %
Non-earning assets:                      
  Cash and due from banks 23,459         22,358         17,885      
  Premises and equipment 13,376         13,465         13,620      
  Goodwill 9,387         9,387         9,387      
  Other intangible assets, net 476         533         700      
  Bank-owned life insurance 11,813         11,732         11,489      
  Allowance for loan losses (11,880 )       (11,591 )       (11,577 )    
  Other non-earning assets 8,665         7,414         13,668      
  Total assets $ 1,427,275         $ 1,368,146         $ 1,259,271      
Interest-bearing liabilities:                      
   Interest-bearing demand deposits $ 53,009   $ 47   0.35 %   $ 60,022   $ 52   0.34 %   $ 61,818   $ 50   0.32 %
  Money market and savings deposits 259,160   759   1.16     249,595   625   0.99     244,792   421   0.68  
  Time deposits 542,047   2,782   2.04     463,373   2,125   1.82     441,090   1,464   1.32  
  Borrowings 66,491   384   2.29     95,371   502   2.09     56,550   183   1.28  
  Subordinated notes 14,888   256   6.82     14,874   256   6.83     14,835   255   6.85  
  Total interest-bearing liabilities $ 935,595   $ 4,228   1.79 %   $ 883,235   $ 3,560   1.60 %   $ 819,085   $ 2,373   1.15 %
Noninterest-bearing liabilities and shareholders' equity:                      
  Noninterest bearing demand deposits 331,867         329,459         321,426      
  Other liabilities 11,905         9,956         10,003      
  Shareholders' equity 147,908         145,496         108,757      
  Total liabilities and shareholders' equity $ 1,427,275         $ 1,368,146         $ 1,259,271      
Net interest income   $ 12,813         $ 13,069         $ 12,001    
Interest spread     3.16 %       3.44 %       3.64 %
Net interest margin (5)     3.71         3.94         3.95  
Tax equivalent effect     0.02         0.03         0.05  
Net interest margin on a fully tax equivalent basis     3.73         3.97         4.00  


(1)   Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2)   Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $83 thousand, $84 thousand and $150 thousand on tax-exempt securities for the three months ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively, using a federal income tax rate of 21% for the 2018 periods and 35% for the 2017 period.
(3)   Includes nonaccrual loans.
(4)   For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5)   Net interest margin represents net interest income divided by average total interest-earning assets.


 

  For the year ended,
  December 31, 2018     December 31, 2017
(Dollars in thousands) Average
Balance
Interest
(1)
Average Rate
(2)
  Average
Balance 
Interest
(1)
Average Rate
(2)
Interest-earning assets:              
Gross loans (3) $ 1,072,794   $ 58,262   5.43 %   $ 973,013   $ 52,043   5.35 %
Investment securities (4):              
Taxable 121,505   2,939   2.42     84,899   1,746   2.06  
Tax-exempt 63,205   1,657   3.13     38,935   955   3.57  
Interest earning cash balances 27,182   546   2.01     43,540   507   1.16  
Federal Home Loan Bank Stock 8,308   420   5.06     8,163   356   4.36  
Total interest-earning assets $ 1,292,994   $ 63,824   4.96 %   $ 1,148,550   $ 55,607   4.88 %
Non-earning assets:              
  Cash and due from banks 20,556         18,590      
  Premises and equipment 13,207         14,576      
  Goodwill 9,387         9,387      
  Other intangible assets, net 560         789      
  Company-owned life insurance 11,692         11,365      
  Allowance for loan losses (11,691 )       (11,466 )    
  Other non-earning assets 9,014         12,164      
  Total assets $ 1,345,719         $ 1,203,955      
Interest-bearing liabilities:              
  Deposits:              
  Interest-bearing demand deposits $ 60,203   $ 198   0.33 %   $ 59,274   $ 169   0.29 %
  Money market and savings deposits 264,656   2,609   0.99     259,449   1,605   0.62  
  Time deposits 477,164   8,248   1.73     373,762   4,493   1.20  
  Borrowings 66,926   1,330   1.99     80,283   797   0.99  
  Subordinated notes 14,866   1,015   6.83     14,813   1,014   6.85  
  Total interest-bearing liabilities $ 883,815   $ 13,400   1.52 %   $ 787,581   $ 8,078   1.03 %
Noninterest-bearing liabilities and shareholders' equity:              
  Noninterest bearing demand deposits 316,764         301,971      
  Other liabilities 10,436         10,297      
  Shareholders' equity 134,704         104,106      
  Total liabilities and shareholders' equity $ 1,345,719         $ 1,203,955      
Net interest income   $ 50,424         $ 47,529    
Interest spread     3.44 %       3.85 %
Net interest margin (5)     3.90         4.14  
Tax equivalent effect     0.02         0.04  
Net interest margin on a fully tax equivalent basis     3.92         4.18  


(1)   Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2)   Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $319 thousand and $434 thousand on tax-exempt securities for the twelve months ended December 31, 2018 and December 31, 2017, respectively, using a federal income tax rate of 21% for the 2018 period and 35% for the 2017 period.
(3)   Includes nonaccrual loans.
(4)   For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5)   Net interest margin represents net interest income divided by average total interest-earning assets.


 

Loan Composition
(Unaudited)
As of
  December 31,   September 30,   June 30,   March 31,   December 31,
(Dollars in thousands) 2018   2018   2018   2018   2017
Commercial real estate
Non-owner occupied $ 367,671   $ 362,450   $   361,341     360,014   $   343,420  
Owner-occupied   194,422       190,131       172,615       172,608       168,342  
Total commercial real estate   562,093   552,581   533,956   532,622   511,762
Commercial and industrial   383,455   397,060   363,239   371,464   377,686
Residential real estate   180,018   164,356   147,763   146,436   144,439
Consumer   999   1,002   831   832   1,036
Total loans $  1,126,565   $
 1,114,999   $    1,045,789   $    1,051,354   $    1,034,923

 

Impaired Assets
(Unaudited)
As of
    December 31,   September 30,   June 30,   March 31,   December 31,
(Dollars in thousands)   2018   2018   2018   2018   2017
Nonaccrual loans                 
Commercial real estate $ 5,927     $ 4,559     $ 2,557     $ 1,946     $ 2,257  
Commercial and industrial 9,605     5,763     5,983     8,192     9,024  
Residential real estate 2,915     2,546     2,737     2,838     2,767  
Consumer     5              
Total nonperforming loans 18,447     12,873     11,277     12,976     14,048  
Other real estate owned                 652  
Total nonperforming assets 18,447     12,873     11,277     12,976     14,700  
Performing troubled debt restructurings                  
Commercial real estate     1,511     1,517     1,525      
Commercial and industrial 568     574     578     582     961  
Residential real estate 363     365     364     258     261  
Total performing troubled debt restructurings 931     2,450     2,459     2,365     1,222  
Total impaired assets $ 19,378     $ 15,323     $ 13,736     $ 15,341     $ 15,922  
                   
Loans 90 days or more past due and still accruing $ 243     $ 354     $ 259     $ 263     $ 440  

 

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Nicole Ransom
(248) 538-2183

Investor Relations Contact:
Peter Root
(248) 538-2186

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